CVS Health

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CVS Health
TypePublic
Traded asNYSECVS
IndustryHealth Care and Retail
Founded2007 through merger of CVS Pharmacy and Caremark Rx
HeadquartersWoonsocket, Rhode Island, U.S.
Area servedUnited States
Key peopleDavid W. Dorman, Chairman
Larry J. Merlo, CEO
ProductsDrug store/Pharmacy
Revenue
  • Increase US$ 126.761 billion (2013) [1]
  • Increase US$ 123.12 billion (2012) [1]
Operating income
  • Increase US$ 8.037 billion (2013) [1]
  • Increase US$ 7.21 billion (2012) [1]
Net income
  • Increase US$ 4.592 billion (2013) [1]
  • Increase US$ 3.864 billion (2012) [1]
Total assets
  • Increase US$ 71.526 billion (2013) [2]
  • Increase US$ 66.221 billion (2012) [1]
Total equity
  • Increase US$ 37.938 billion (2013) [2]
  • Decrease US$ 37.653 billion (2012) [1]
Employees208,000 (Dec 2013)[3]
Websitecvshealth.com
 
  (Redirected from CVS Caremark)
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CVS Health
TypePublic
Traded asNYSECVS
IndustryHealth Care and Retail
Founded2007 through merger of CVS Pharmacy and Caremark Rx
HeadquartersWoonsocket, Rhode Island, U.S.
Area servedUnited States
Key peopleDavid W. Dorman, Chairman
Larry J. Merlo, CEO
ProductsDrug store/Pharmacy
Revenue
  • Increase US$ 126.761 billion (2013) [1]
  • Increase US$ 123.12 billion (2012) [1]
Operating income
  • Increase US$ 8.037 billion (2013) [1]
  • Increase US$ 7.21 billion (2012) [1]
Net income
  • Increase US$ 4.592 billion (2013) [1]
  • Increase US$ 3.864 billion (2012) [1]
Total assets
  • Increase US$ 71.526 billion (2013) [2]
  • Increase US$ 66.221 billion (2012) [1]
Total equity
  • Increase US$ 37.938 billion (2013) [2]
  • Decrease US$ 37.653 billion (2012) [1]
Employees208,000 (Dec 2013)[3]
Websitecvshealth.com

CVS Health (formerly CVS Caremark Corporation)[4] is an American retailer and health care company. CVS Health operates over 7,700 CVS Pharmacy and Longs Drugs stores;[5] a pharmacy benefit manager, mail order and specialty pharmacies, a retail-based health clinic subsidiary, MinuteClinic; and an online pharmacy, CVS.com. CVS Health is chartered in Delaware, and is headquartered in Woonsocket, Rhode Island, where its four business units are also headquartered. As of 2014, it ranked 35th in the Fortune Global 500 list of the world's largest companies, and 12th in the United States-only Fortune 500.[6][7] It was the largest company in either list with operations solely in the United States.[citation needed]

Background[edit]

CVS Health has four operating segments: CVS/pharmacy, CVS/caremark, CVS/specialty and CVS/minuteclinic which operates within CVS Pharmacy stores.

Strategic Business Units[edit]

Name[edit]

CVS began as Melville Corporation,[10][11] formerly based in Rye, New York.

CVS[edit]

The CVS name once stood for Consumer Value Stores; though Thomas Ryan, CVS Health's former CEO, has said he now considers it to stand for "Convenience, Value and Service".[12]

Caremark[edit]

Caremark was established by James M. Sweeney in 1979, as Home Health Care of America (HHCA), incorporated in Delaware, with corporate headquarters in Irvine, California. The first office was opened in Beachwood, Ohio, with four employees, in conjunction with Ezra Steiger, of the Cleveland Clinic Foundation. Steiger's Hyperalimentation Team worked closely to provide supplies at home for their Parental Therapy patients. Satellite offices were subsequently opened in Atlanta, Philadelphia, Houston, Chicago, and Irvine. HHCA changed its name to Caremark in 1985. In 1987, Caremark was acquired by Baxter International. In 1992, Baxter spun off Caremark as a public company. In 1996, Caremark merged with Birmingham, Alabama, based MedPartners/Mullikin, Inc., with the combined company being called MedPartners, Inc. In 1998, MedPartners changed its name to Caremark Rx.[13]

Health Care Rebranding: CVS Health[edit]

On September 3, 2014, it was announced that CVS as of midnight on Tuesday Sept 2, 2014 will no longer sell tobacco at all of its 7,700 locations nationwide, which is a month earlier than planned. The company also announced that it would change its corporate name to CVS Health, in order to reflect “its broader health care commitment," and also a desire to change the future health of Americans, but all retail stores will still be called CVS/Pharmacy.[14][15][16]

Acquisitions and growth[edit]

Since 1990, CVS has been rapidly growing in order to become a national drug store chain.

CVS had previously operated stores in southern California and completely withdrew from the market in 1993. CVS sold virtually all the locations to American Drug Stores, the drug store division of American Stores Company. American Stores operated its drug stores in southern California as Sav-on Drugs. Ironically, many of the stores in Southern California that CVS acquired were stores that CVS had formerly owned. At the time CVS bought the stores back, Sav-on operated them as Sav-on Express stores. The Express name was used by Sav-on to help customers identify those stores that did not carry all lines of merchandise as compared to the larger traditional Sav-on Drugs location, hence the name Sav-on Express. As a result of the acquisition, the chain now operates over 6,200 stores in 43 states and the District of Columbia.[25]

Community involvement[edit]

Private label[edit]

CVS has an extensive assortment of various private labels and proprietary brands. In addition to CVS Brand, CVS also carries exclusive store brands under the names of Just the Basics, Essence of Beauty, Gold Emblem, Absolutely Divine, Blade, Earth Essentials, Caliber, and Life Fitness. CVS also holds exclusive contracts to sell proprietary brands such as Nuprin, Christophe, PreVentin-AT, 24/7, Skin Effects, and the European brand Lumene. A new exclusive Playskool line of baby care is also in CVS stores. CVS was also first to sell single-use digital cameras and camcorders from Pure Digital. The acquisition of the SavOn/Osco stores from the Albertson's chain provided CVS with its first opportunity for private label spirits. At a meeting for acquisition trainers, Larry Merlo reported Tom Ryan's enthusiasm, quoting, "I am not signing my name on a bottle of vodka!" [34]

Controversies[edit]

On August 22, 2001, CVS Corp was sued for purchasing Trio Drugs' records which should be kept confidential.[35]

Elensys[edit]

In 1998, the Washington Post reported that CVS Corporation appeared to be sharing prescription drug information with the Woburn, Massachusetts, based marketing company, Elensys. According to the Post, Elensys received information on specific prescription drugs that individual CVS customers had purchased and used this information to send targeted direct mailings urging customers to renew prescriptions and promoting other products in which they might be interested. CVS and Elensys argued that there were no privacy issues because Elensys was acting solely as a contractor to CVS, and because the purpose of the mailings was to educate consumers. CVS claimed that it never shared customers' medical histories with Elensys (despite the Washington Post's indirect evidence that they had). George D. Lundberg, editor of the Journal of the American Medical Association, called the practice "a gross invasion" of privacy. Following a firestorm of criticism and complaints by consumers, CVS discontinued the relationship with Elensys, and moved the practice in-house.[citation needed]

Boston prescriptions[edit]

During 2005, a series of prescription mistakes came to light in some of CVS Corporation's Boston-area stores. An investigation confirmed 62 errors or quality problems going back to 2002. In February 2006, the state Board of Pharmacy announced that the non-profit Institute for Safe Medication Practices (ISMP) would monitor all Massachusetts stores for the next two years.[36]

Health and Medicare fraud[edit]

In the late 1980s and early 1990s Caremark RX was involved in a number of health fraud and Medicare fraud scandals.[37][38] The combined price to settle this dispute with the U.S. Government cost the company over $250,000,000.[39]

Pharmaceutical kickbacks[edit]

In 2005, Caremark Rx paid $137.5 million to settle federal lawsuits filed by whistle-blowers that accused a company it acquired in 2003 of improper dealings with pharmaceutical manufacturers.

The lawsuits said that the acquired company, AdvancePCS, accepted kickbacks from drug makers to promote their products over those of rivals under contracts with government programs including the Federal Employees Health Benefit Program, the Mail Handlers Health Benefit Program and Medicare health maintenance plans.

There was no admission of wrongdoing by Caremark or AdvancePCS.

CVS Caremark Corp. has changed their practices. The formulary revision process considers manufacturer rebates, payments from drug manufacturers for low placement on PBM formularies, along with average wholesale price (AWP), drug availability, and bulk discounts when choosing at which co-pay a brand name drug should be placed.[40]

Deceptive business practices[edit]

In February 2008, CVS settled a large civil lawsuit for deceptive business practices. The Kaiser Family Foundation reported:[41]

CVS has agreed to a $38.5 million settlement in a multi-state civil deceptive-practices lawsuit against pharmacy benefit manager Caremark filed by 28 attorneys general, the Chicago Tribune reports.[42] The attorneys general, led by Lisa Madigan (D) of Illinois and Douglas Ganslar (D) of Maryland, allege that Caremark "engaged in deceptive business practices" by informing physicians that patients or health plans could save money if patients were switched to certain brand-name prescription drugs (Miller, Chicago Tribune, 2/14).[42]

However, the switch often saved patients and health plans only small amounts or increased their costs, while increasing Caremark's profits, Connecticut Attorney General Richard Blumenthal (D) said (Levick, Hartford Courant, 2/15).[43] Pennsylvania Attorney General Tom Corbett (R) said the PBM [44] kept discounts and rebates that should have been passed on to employers and patients (Levy, AP/San Francisco Chronicle, 2/14).[45] In addition, Caremark did not "adequately inform doctors" of the full financial effect of the switch and did not disclose that the switch would increase Caremark's profits, the lawsuit alleges (Chicago Tribune, 2/14).[42]

...The settlement prohibits CVS from requesting prescription drug switches in certain cases, such as when the cost to the patient would be higher with the new prescription drug; when the original prescription drug's patent will expire within six months; and when patients were switched from a similar prescription drug within the previous two years (Hartford Courant, 2/15).[43] Patients also have the ability to decline a switch from the prescribed treatment to the prescription offered by the pharmacy under the settlement, Madigan said (Bloomberg News/Philadelphia Inquirer, 2/15).[45]

Rhode Island Senate corruption case[edit]

In 2008, two former CVS executives, John R. "Jack" Kramer and Carlos Ortiz, were charged with 20 counts of mail fraud, bribery and conspiracy in relation to Operation Dollar Bill, a probe of corruption in the Rhode Island General Assembly. Kramer and Ortiz hired former State Senator John Celona, who currently is serving 2½ years on corruption charges involving CVS and other companies, as a media consultant for $12,000 a year. Celona was known for walking out on a pharmacy choice vote in the state senate while on the CVS payroll. Despite originally claiming CVS never bought any favors in his own trial, he testified against Kramer and Ortiz as the prosecution's star witness. On May 31, 2008, Kramer and Ortiz were acquitted on all counts. One juror went on the record as saying “My perception living in Rhode Island all my life is, 'Yeah, this probably did go on', but I didn't see any proof beyond a reasonable doubt that CVS did this.”[46]

Business practices under investigation[edit]

On May 4, 2010, CVS Caremark Corp. announced that its business practices were being investigated by a group of 24 states, along with the District of Columbia and Los Angeles County. At issue is the post-merger relationship between CVS and Caremark. In addition, the company had earlier acknowledged in a filing with the Securities and Exchange Commission (SEC) that it had received a subpoena from the Office of Inspector General of the United States Department of Health and Human Services, requiring the company to provide information regarding the incentives the company provides to customers who transfer their prescriptions to CVS, including gift cards, goods and other incentives.[47]

FTC charges[edit]

On February 18, 2009, CVS Caremark agreed to settle Federal Trade Commission charges that it failed to take reasonable and appropriate security measures to protect the sensitive financial and medical information of its customers and employees, in violation of federal law. In a separate but related agreement, the company’s pharmacy chain also has agreed to pay $2.25 million to resolve Department of Health and Human Services allegations that it violated the Health Insurance Portability and Accountability Act (HIPAA).[48]

FTC deceptive pricing charges[edit]

On January 12, 2012, CVS Caremark paid $5 million to settle Federal Trade Commission charges that it misrepresented the prices of certain Medicare Part D prescription drugs – including drugs used to treat breast cancer symptoms and epilepsy – at CVS and Walgreens pharmacies.[49]

DEA investigation into Oxycodone diversion[edit]

See also: Drug diversion

According to the U.S. Justice Department, in 2011 CVS pharmacies in Sanford, Florida, ordered enough painkillers to supply a population eight times its size. Sanford has a population of 53,000 but the supply would support 400,000.[50] According to the Drug Enforcement Administration, in 2010 a single CVS pharmacy in Sanford ordered 1.8 million Oxycodone pills, an average of 137,994 pills a month. Other pharmacy customers in Florida averaged 5,364 oxycodone pills a month. DEA investigators serving a warrant to a CVS pharmacy in Sanford on October 18, 2011, noted that "approximately every third car that came through the drive-thru lane had prescriptions for oxycodone or hydrocodone". According to the DEA, a pharmacist at that location stated to investigators that "her customers often requested certain brands of oxycodone using street slang", an indicator that the drugs were being diverted and not used for legitimate pain management. In response, CVS in a statement issued February 17 in response to opioid trafficking questions from USA Today said the company is committed to working with the DEA and had taken "significant actions to ensure appropriate dispensing of painkillers in Florida." [51]

Restatements[edit]

On November 15, 1999, CVS announced a restatement of its financial results for 1997 and 1998 following a Securities and Exchange Commission review of acquisition-related charges.[52]

On February 25, 2005, CVS said it was reducing its previously announced fourth-quarter earnings by $40.5 million, to reflect the way it accounted for leased properties in its results.[53]

On February 5, 2014 CVS announced that the company would discontinue the sale of all tobacco and cigarette products from their stores by October 1, 2014. In a statement explaining the change, CVS President & CEO Larry J. Merlo said, "We came to the decision that cigarettes and providing health care just don’t go together in the same setting." [54]

See also[edit]

References[edit]

  1. ^ a b c d e f g h "CVS CAREMARK CORP 2013 Annual Report Form (10-K)" (XBRL). United States Securities and Exchange Commission. February 11, 2014. 
  2. ^ a b "CVS CAREMARK CORP 2014 Q1 Quarterly Report Form (10-Q)" (XBRL). United States Securities and Exchange Commission. May 2, 2014. 
  3. ^ "CVS Caremark, Form 10-K, Annual Report, Filing Date Feb 15, 2014". secdatabase.com. Retrieved Mar 29, 2013. 
  4. ^ http://www.cvshealth.com/newsroom/press-releases/cvs-caremark-announces-corporate-name-change-cvs-health-reflect-broader
  5. ^ http://www.cvshealth.com/our-businesses/cvspharmacy
  6. ^ "CVS Caremark". Fortune Global 500. 2013. 
  7. ^ CVS Caremark. Fortune 500. Retrieved on 2014-08-07.
  8. ^ http://www.cvshealth.com/our-businesses/cvspharmacy
  9. ^ http://www.cvshealth.com/our-businesses/minuteclinic
  10. ^ "CVS Caremark, Form 8-K, Current Report, Filing Date Jun 7, 1996". secdatabase.com. Retrieved Mar 29, 2013. 
  11. ^ a b "CVS Caremark, Form 8-K, Current Report, Filing Date Dec 6, 1996". secdatabase.com. Retrieved Mar 29, 2013. 
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  13. ^ "Hoover's Profile: Caremark Pharmacy Services". Answers.com. Retrieved 2008-03-03. 
  14. ^ Japsen, Bruce. "CVS Stops Tobacco Sales Today, Changes Name To Reflect New Era". Forbes. Retrieved 3 September 2014. 
  15. ^ O'Donnel, Jayne; Ungar, Laura. "CVS stops selling tobacco, offers quit-smoking programs". USA Today. Retrieved 3 September 2014. 
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  20. ^ "CVS Caremark, Form 8-K, Current Report, Filing Date Apr 3, 1998". secdatabase.com. Retrieved Mar 29, 2013. 
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  28. ^ "CVS Caremark, Form 8-K, Current Report, Filing Date Nov 7, 2007". secdatabase.com. Retrieved Mar 29, 2013. 
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  34. ^ Larry Merlo, 06/22/2006, Corporate Headquarters, Woonsocket, RI
  35. ^ "CE: Recent legal cases of 2001: A heads-up for pharmacists". 
  36. ^ Rowland, Christopher (2006-02-10). "CVS faces pharmacy reviews". Boston Globe. Retrieved 2008-02-25. 
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  39. ^ In Re Caremark Int'l, Inc., Derivative Litigation, A.2d 959 (Delaware Chancery Court 1996).
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  44. ^ Pharmacy Benefit Manager
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  52. ^ "CVS Will Restate Results After SEC Prompts Revision Of Charges". 
  53. ^ "CVS to restate 4Q on accounting change". 
  54. ^ "CVS Plans to End Sales of Tobacco Products by Oct. 1". 

External links[edit]